If people refused to use banks to create checkable deposits, the banking system would:
A) not be affected in the money creating process.
B) not have a way to loan out excess reserves.
C) be able to expand the money supply by more than the money multiplier indicates.
D) not be able to create new money.

Question

Quizplus · Accepted Answer

Checkable deposits are the primary source of funds for banks to create new money through the money creation process. Without checkable deposits, banks would not be able to create new money and the money supply would not expand.

If People Refused to Use Banks to Create Checkable Deposits